The Importance of Estate Planning After Your Divorce
Estate planning may not be high on your list of priorities as you go through a divorce and its aftermath. However, divorce alters personal and legal relationships in ways that can affect how you wish your property to be treated in the event of your disability or death. It’s critical to review and update your estate plan after the divorce to make sure your intended dispositions are spelled out.
Under state law, a divorce generally terminates any provision for the benefit of your spouse in any document. That means the property transfer will not be carried out unless there is a written contract or court order that shows you intended to keep your former spouse as a beneficiary. If that is not the intent, then another beneficiary needs to be designated. Otherwise, a court may distribute the property in a way you would not have wanted.
There are several estate planning items you will want to look at after a divorce, including your last will and testament, life insurance policy, annuity contract, pension, profit-sharing plan and other documents for distributing property.
If you had a will while you were married, you will want to update it or make a new one. If you don’t have a will, a divorce gives you multiple good reasons to make one, such as:
- Deciding who gets your property — Without a will, the court must rely on state law to determine who receives your property, and this isn’t always the result you intended.
- Naming your executor — A will lets you specify who will supervise the management and distribution of your assets. If you don’t have a will, the court will appoint a personal representative of its own choosing.
- Designating a trustee for minor children — A child under the age of 18 cannot inherit property directly. Any bequest to children will be held in trust by the court until they reach majority. You can name your preference for a trustee, which a court will generally honor and which will make it easier for the property to be managed for the children’s benefit.
In your post-divorce estate plan, you should also take care to update any beneficiary designations for any asset, such as a life insurance policy, that will be directly distributed rather than pass through your will. Finally, if you have created a power of attorney that gives your ex-spouse authority over your financial matters or healthcare decisions if you become disabled, you should cancel it and create a new document.
The Law Offices of Jennifer Courtney & Associates, P.C. helps clients throughout Bucks County navigate the financial complexities of divorce, including attention to estate planning considerations. Call us at 215.493.3360 or contact us online to schedule a consultation.